Page 76 - Why We Want You To Be Rich - Donald Trump, Robert Kiyosaki.pdf

70 I CHAPTER FIVE

company spent approximately $102.34 on capital improvements.
The question that should be running through your mind is, if
General Motors' earnings during this time period time totaled
$17.92 and it paid out as dividends $20.62, where did the extra
$2.68 that ispaid out in dividends and the $102.34 that it spent on
capital improvements come from?"

This little example does not take into account GM's lossofmarket share,
the number of employees who are not working (yet are being paid), an
under-funded pension plan and medical liabilities. In other words, just like
the United States, the biggest carmaker in the world isteetering on the edge
ofbankruptcy. What is obviouslygood for GM is alsogood for America, but
can we afford the price?
When you look at GM's numbers, you do not have to have an MBA to
understand them ... sixth-grade math will do. Ask yourselfthis, "How can a
company that earns $17.92 a share payout a dividend of$20.62 a share and
stay in business?" Any child can tell you that ifyou have $17.92 in your
hand, you cannot find $20.62 in that amount. The next question is, "How
can a company spend $102.34 a share when it only earns $17.92 a share?"
Once again, a 12 year old can tell you that spending $102.34 when you only
earned $17.92 is not good money management. It just does not make sense.
Yet,even though it does not make sense,millions ofpeople are investing
in GM, betting their retirement on GM's future, and listening to
stockbrokers and financial planners who advise them to invest in blue-chip
companies like GM. How can people be so naive? My answer: "No financial
education."

Warren Buffett may have another answer to that question. A quote:

"It has been helpful to me to have tens of thousands (ofstudents)
turned out of business schools taught that it didn't do any good
to think."

This quote may explain why a company such as GM, with thousands of
smart people working for it, can make such foolish financial decisions.

WHY WE WANT You To BE RICH